Silence and fall

Oil prices have been falling all week

The past week was marked by a fall in oil prices. Last Friday, quotes dropped to their lowest level in five months - Brent cost $62.24 per barrel in London. Since mid-summer, when the price of oil set a historical record amid the conflict over the Iranian nuclear program, the price of raw materials has fallen by almost 20%. Analysts talk about some stabilization in the oil market and make an optimistic forecast, according to which next year prices are unlikely to exceed $60-65 per barrel. However, yesterday prices rose slightly: in London - by 1.1 dollars, to 64.46 dollars per barrel of Brent. The reason this time was the statement by Iranian Oil Minister Kazem Vaziri-Khamani about a possible reduction in production quotas by OPEC countries due to a revision of the consumption forecast.

The main event of the oil market in September was the 142nd OPEC conference, at which it was decided to keep production quotas at the same level - 28 million barrels of oil per day. OPEC promised to return to the issue of the volume of quotas only at the next conference in December. The announcement of the American Chevron about the discovery of a giant field in the Gulf of Mexico with reserves of 15 billion barrels (for comparison: the reserves of the Prudhoe Bay field, widely known due to the accident, developed by BP in Alaska, reached 13 billion barrels) came at just the right time for the market. Analysts estimate that Chevron's find could increase US reserves by 50%. And although oil lies there at a depth of 8 km, and development is planned only for 2010, the market reacted to this news.

The weather also contributed to stabilization. In August and September, hurricanes and storms usually rage in one of the leading producing areas - the Gulf of Mexico. In past years, for example, the famous “Rita”, “Katrina”, “Vilma” and others managed to increase prices to more than $70 per barrel. This year there was a pleasant calm on the coast; oil production finally caught up with rapidly growing demand, and accumulated oil reserves were unclaimed. This was clearly demonstrated at the end of last week after the publication of data on fuel reserves in the United States. The US Department of Energy reported that distillate inventories in the country rose by 4.6 million barrels from September 2 to 8, to 144.5 million barrels, which is 11.9% above the five-year average.

All this, analysts emphasize, is happening against the backdrop of an improving geopolitical situation. As a result, for the first five months, prices for North Sea Brent dropped below $63 per barrel. And the OPEC basket (the average price of the ten most popular varieties) fell in price very sharply in September: in August the average price was $68.81 per barrel, last week it dropped below the psychological level of $60 per barrel, to $59.53 ., and at the end of Friday it amounted to $58.44.

Analysts immediately revised their forecast. Now they are almost sure that next year prices will fluctuate in the range of 55-65 dollars per barrel. “Currently, the authorities of oil-consuming countries are pursuing an active policy aimed at reducing oil prices, which involves, in particular, increasing interest rates. As you can see, it has brought good results over the past month. If this policy continues, next year $50 per barrel could become an easy target for prices,” says Zerich Capital analyst Nikolai Podlevskikh. And Dmitry Mangileev from Prospekt Investment Company notes that recently the imbalance between oil consumption and its production has been seriously reduced in the market. “Finally, production has begun to exceed demand, which means there is an opportunity to return to prices at $55-60 per barrel next year,” he notes. A similar forecast is given by Brokercreditservice expert Maxim Shein. According to him, in the next five years, with the commissioning of almost ten of the world's largest fields, prices will gradually decline, by an average of $5 per barrel annually. Thus, if in 2007 the cost of a barrel reaches 60-65 dollars, then by 2010 it will not exceed 43 dollars, the analyst believes.

Anna GORSHKOVA